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NEGATIVE 

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Author: 


Perkins,  George 

Walbridge 

Title: 

Profit  sharing;  or 
worker's  fair  share 

Place: 


J 


The 


[New  York] 


Date: 


[1919] 


MASTER   NEGATIVE   « 


\ 


COLUMBIA  UNIVERSITY  LIBRARIES 
PRESERVATION  DIVISION 

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ORIGINAL  MATERIAL  AS  FILMED  -    EXISTING  BIBLIOGRAPHIC  RECORD 


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Perkins,  George  Walbridge,  1862- 

Profit  sharing ;  or,  The  worker 's  fair  share,  by  George 
AY. Perkins...    [New York!  1919i 

39  p.    17'". 

"Address  before  the  National  civic  federation,  September  11,  1919." 


1.  Profit-sharing. 


Title  from  Bureau  of 


A 19-1323 
Railway  Economics.    Printed  by  L.C. 
(s21cl] 


RESTRICTIONS  ON  USE; 


TECHNICAL  MICROFORM  DATA 


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Profit 
Sharing 

or 

Th^  fPorker*s 
Fair  Share 

By 
George  W.  Perkins 


con  M8IA  UNWEBal    V 


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Columbia  ^mbersitt|) 

in  ti)e  Citp  of  i^eto  ^ovk 


School  of  Business 


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Profit  Sharing 


or 


The  fForker's  Fair  Share 


By 
George  W.  Perkins 


Address  before  the 

National  Civic  Federation 

September  iiy  igig 


IRREGULAR  PAGINATION 


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ABETTER  utn- 
der8tandiiii& 
between  GapitTal 
andLaborisof  8U  ch  \^ 
importance  that:;  a  ^ 
very  frank  expres- 
sion of  views  on  t^iie 
subject  matter 
herein  containjed 
is  requested,  in  car- 
der that  we  m^iy 
compile  conunenjts 
and    suggestions 
that  will  be  helpful 
to     all    who    are 
interested    in   the 
subject. 


,'' 


^ 


National  Civic 
Federation 

Alton  B.  Parker,  PresidpU 
1  Madison  Ave.,  N.  Y.  Ciity 


i 


Profit  Sharing 


or 


hT' 


a 


The  Worker's  Fair  Share 

THE  Worker's  Fair  Share  "  has  been 
a  real  problem  ever  since  the  world 
began.  It  has  changed  greatly  as 
civilization  has  progressed,  and  has 
crowded  harder  and  harder  for  solution 
as  intelUgence  and  education  have 
spread  and  broadened. 

The  worker's  fair  share  was  an  un- 
solved problem  when  the  expression 
that  designated  the  relationship  between 
the  man  of  capital  and  the  man  of  labor 
was  ^' owner  and  slave/' 

It  still  existed  when  the  expression  of 
relationship  became  ^'master  and  man." 

It  still  exists  in  these  days,  when  the 
expression  of  relationship  is  ^*  employer 
and  employe." 

(61 


1 1 


.* 


PROFIT      SHARING      OR      THE 


WORKER'S       FAIR       SHARE 


These  very  changes  in  the  expressions 
used  to  designate  the  relationship  be- 
tween capital  and  labor  show  that 
steady  progress  has  been  made  toward 
solving  the  problem  of  the  worker's  fair 
share. 

I  take  it  that  everyone  beUeves  that 
we  cannot  go  back  to  the  old  conditions ; 
that  we  must  move  forward  to  an  even 
better  relationship  than  that  expressed 
by  the  term  ^^  employer  and  employe." 

You  ask :  ^'  What  is  this  newer  relation- 
ship to  be  and  what  term  will  express  it?'' 
I  answer  that  I  beheve  it  must  be 

^'partners.'' 

If  I  am  right,  then  the  next  question 
is  how  can  this  relationship  be  worked 
out  so  as  to  bring  the  best  results  to  all 
concerned? 

This  problem  has  greatly  interested 
me  for  thirty  years.  I  have  studied  it 
earnestly,  not  from  books  but  from 
experience  obtained  in  the  hard  knocks 

[6] 


of  everyday  work  in  the  various  business      o. 


^i 


h 


^ 


undertakings  with  which  I  have 
connected.  ^    ^^^ 

Twenty-five  years  ago  I  6*cg|m(^  con- 
vinced that  only  thjijSXgn  ^J^t  sharing 
that  was  real,  hfirost^atJa  open  could  we 
hope  to  find  anything  like  a  satisfactory 
and  permanent  method  of  arriving  at 
the  worker's  fair  share. 

Ever  since  that  time  I  have  improved 
every  opportunity  to  spread  the  gospel 
of  profit  sharing  and  to  have  its  prin- 
ciples adopted  by  business  organizations, 
and  I  have  greatly  appreciated  the 
honor  of  serving  as  Chairman  of  your 
profit  sharing  committee  since  it  was 
organized. 

I  recall  that  I  read  a  profit  sharing 
paper  before  this  organization  about 
twelve  years  ago,  and  I  find  little,  if 
anything,  to  change  in  the  basic  prin- 
ciples then  laid  down.  I  beheve  the 
work  that  has  been  accomplished  mean- 

[7] 


<^ 


^ 


^ 


PROFIT      SHARING      OR      THE 

while  has  been  worth  while  and  that  the 
time  is  now  ripe  for  us  to  push  it  harder 
than  ever  along  constructive  lines. 

I  have  found  that  my  views  on  profit 
sharing,  and  my  beHefs  as  to  how  to 
apply  it,  differ  radically  from  those  of 
many  other  people;  that  the  plans  I 
have  been  instrumental  in  having 
adopted  are  very  different  in  application 
and  in  results  from  many  other  so-called 
profit  sharing  plans.  I  want,  if  possible, 
to  point  out  wherein  these  differences  lie. 


Profit  Sharing  Not  Philanthropy 

In  the  first  place,  I  do  not  look  upon 
profit  sharing  as  philanthropy  or  a  form 
of  benevolence. 

I  do  not  put  it  in  the  same  class  with 
gifts  at  Christmas-time  or  bonuses  at  the 
end  of  the  year.    I  do  not  approve  or 

[8] 


4% 


x*         y 


I 


r"^ 

^«#', 


WORKER'S       FAIR       SHARE 

believe  in  any  plan  that  even  savors  of 
giving  a  man  something  for  nothing. 

I  do  not  beUeve  that  any  self- 
respecting  man  wants  any  such  arrange- 
ment, and  I  do  not  believe  that  any 
broad-minded,  seK-respecting  employer 
can,  in  the  long  run,  afford  to  have  any 
such  arrangement. 

The  profit  sharing  I  believe  in  is  the 
kind  that  is  real ;  the  kind  that  promotes 
thorough  and  efficient  cooperation  be- 
tween employer  and  employe;  the  kind 
that  makes  partners  of  employes;  the 
sort  of  profit  sharing  that  is  practiced 
between  partners  in  a  business. 

Anything  short  of  this  is  bound  to 
result  in  failure  and  will  widen  rather 
than  narrow  the  breach  between  em- 
ployer and  employe. 

Close  observation,  coupled  with  con- 
siderable experience,  has  convinced  me 
that  practically  all  the  many  failures  in 
profit  sharing,  both  in  this  country  and 

[9] 


>i 


i 


li 


PROFIT      SHARING      OR      THE 

in  Europe,  have  occurred  because  at 
bottom  the  plans  were  not  honestly 
devised  nor  equitably  worked  out. 

In  nine  cases  out  of  ten,  at  some  point 
in  the  practical  application  of  the  plans 
that  have  failed,  the  fact  has  developed 
that  they  were  not  mutually  beneficial; 
they  either  did  not  enhance  the  eflficiency 
of  the  men  in  such  a  way  as  to  satisfy  the 
employer,  or  else  did  not  distribute 
profits  in  such  a  way  as  to  benefit  and 
satisfy  the  employes. 

No  partnership  where  the  profits  are 
shared  by  two  or  a  half  dozen  partners 
could  last  any  length  of  time  unless 
mutually  beneficial,  and  the  same  rule 
holds  good  in  a  larger  partnership  where 
the  profits  are  shared  among  many  part- 
ners. 

No  man  or  firm  or  corporation  that 
is  thinking  of  adopting  profit  sharing 
can  hope  for  success,  unless  prepared  to 
approach  the  subject  in  this  spirit  and 

[10] 


\4 


I 


ri 


WORKER'S       FAIR       SHARE 

deal  with  it  in  an  absolutely  honest, 
open  and  broad-minded  manner. 

As  I  have  said,  the  relation  between 
employer  and  employe  has  changed  with 
the  centuries. 

Originally  it  was  owner  and  slave; 
then  it  was  master  and  man;  now  it  is 
employer  and  employe,  each  stage  of 
development  bringing  the  employer  and 
employe  into  closer  cooperation.  What 
has  caused  this  change  in  relationship? 

In  my  judgment  the  cause  is  found  in 
the  vast  and  broad  educational  forces 
that  have  been  at  work  in  the  world. 

Since  we  founded  this  country  we 
have  spent  approximately  as  much 
money  on  our  educational  systems  as  on 
our  railroad  systems. 

We  consider  our  railroads  financially 
successful  if  they  earn  dividends. 

If  our  educational  systems  are  suc- 
cessful the  dividends  we  get  from  them 

[11] 


b  : 


'I' 


PROFIT      SHARING      OR      THE 

are    minds    that    think    better,    more 
clearly,  more  independently. 

Right  now,  this  country  is  getting 
such  dividends  from  its  vast  invest- 
ments in  educational  plants. 

In  the  industrial  world,  in  the  rela- 
tions between  capital  and  labor,  be- 
tween employer  and  employe,  we  are 
getting  these  very  dividends,  and  getting 
them  direct  and  in  cumulative  fashion 
on  the  wage  question. 

In  the  past,  the  man  who  was  not 
educated  or  trained  to  think  independ- 
ently struck  because  he  wanted  $2  a  day 
if  he  was  only  getting  $1.75;  and  for 
quite  a  period  labor  differences  were 
settled  on  this  basis. 

I  believe  that  we  are  rapidly  passing 
out  of  that  period,  for  our  laboring 
people  are  so  well  educated  and  so  able 
to  think  independently  that,  in  many 
cases,  they  are  no  longer  striking  for  a 
definite  increase  in  wages,  but  for  what 

[12] 


^ 


i 


WORKER'S       FAIR       SHARE 

they  regard  as  a  fairer  proportion  of  the 
profits  of  the  business  in  which  they  are 
engaged. 

If  I  am  right  about  this,  then  we  are 
rapidly  leaving  behind  the  period  when 
labor  disputes  could  be  settled  by  a 
mere  increase  in  wages  and  are  entering 
the  period  when  profit  sharmg  in  some 
form  must  be  practiced. 

Therefore,  the  question  is,  how  can  it 
be  practiced  effectively? 


113] 


PROFIT      SHARING      OR      THE 


WORKER'S       FAIR       SHARE 


Outline  of  a  Correct  Profit- 
Sharing  Plan 

A  good  many  years  of  actual  experi- 
ence have  made  me  very  optimistic 
regarding  profit-sharing  plans  worked 
out  along  the  following  lines: 


First: 


Second: 


Third: 


Every  business  has,  first  of  all, 
to  earn  operating  expenses,  de- 
preciation, and  fair  returns  on 
honest  capitalization. 

I  believe  that  every  business 
should  consider  that  the  com- 
pensation paid  employes  is  for 
the  purpose  of  earning  a  sum  of 
money  sufficient  to  pay  the 
above-mentioned  items. 

I  believe  that  any  profits  over 
and  above  such  sum  should,  on 
some  percentage  basis,  be  divided 
between  the  capital  used  in  the 
business  and  the  employes  en- 
gaged in  the  business. 

[14] 


Fourth: 


Fifth: 


i 

\ 


I  believe  that  in  neither  case 
should  these  profits  be  im- 
mediately withdrawn  from  the 
business;  that  they  should  be 
left  in  the  business  for  a  reason- 
able length  of  time,  to  protect 
and  increase  its  financial  strength 
and  safety;  that,  in  the  case  of 
capital,  its  share  of  these  profits 
should  be  carried  to  surplus; 
that,  in  the  case  of  employes, 
their  share  of  these  profits  should 
be  distributed  to  them  in  some 
form  of  security  representing  an 
interest  in  the  business,  and  that 
each  employe  should  be  re- 
quired to  hold  such  security  for 
a  reasonable  length  of  time,  say 
three  to  five  years. 

I  believe  that  the  employes' 
share  of  these  profits  should  be 
allotted  to  them  as  nearly  as 
possible  on  the  basis  of  the  com- 
pensation they  receive.  Up  to 
date,  this  has  proved  to  be  the 
best  method. 


[15] 


PROFIT      SHARING      OR      THE 


WORKER'S       FAIR       SHARE 


i 


Results  Attained  By  a  Proper 

Plan 

Now,  let  us  see  what  such  a  plan 
means :  In  the  first  place,  it  means  that 
under  such  an  arrangement  each  em- 
ploye becomes  a  workmg  partner  in  the 
business. 

He  is  on  the  same  footing  as  the 
financial  partners,  for  if  the  concern  is  a 
partnership  with,  say,  four  or  five 
members,  the  partners  themselves  are 
drawing  out  each  year  what,  in  a  way, 
might  be  called  salaries,  viz.,  approxi- 
mately the  amount  of  money  necessary 
to  meet  their  general  living  expenses, 
leaving  their  surplus  profits  in  the 
business. 

Any  partnership  or  any  profit-sharing 
plan  that  divided  up  the  profits  and 
withdrew  them  in  cash  at  the  end  of 
every  year  could  not  last  very  long 

[16] 


^ 


Why  Some  Profit-Sharing 
Plans  Fail 

Many  profit-sharing  plans  have 
divided  profits  with  employes  on  a  cash 
basis  and  turned  the  money  over  to  the 
employes  every  so  often,  usually  once  a 
year. 

The  result  has  been  that  if  a  man 
earning  $1,000  a  year  received  $200  at 
the  end  of  the  year  from  a  profit-sharing 
plan,  he  promptly  lifted  his  Hving 
expenses  from  a  $1,000  basis  to  a  $1,200 
basis,  and  began  to  look  upon  his  in- 
come as  $1,200  rather  than  $1,000,  and 
the  extra  $200  did  httle  to  increase  his 
activity  and  efiiciency,  or  to  promote 
his  intellectual  efforts  in  the  business 
concerned. 

Then,  if  a  period  came  when  business 
was  dull  or  poor  and  he  did  not  get  the 
extra  $200,  he  found  fault  with  the 

[17] 


PROFIT      SHARING      OR      THE 

owners   of   the   business   and   became 
grouchy  and  incUned  to  lose  interest  in 

his  work. 

If  he  did  not  use  the  $200  for  his  Uving 
expenses,  he  probably  invested  it  in  a 
suburban  lot  or  in  some  stock  that  was 
recommended  to  him,  or  in  something 
that  he  knew  little  or  nothing  about. 

Then,  if  his  investment  began  to  go 
wrong,  he  worried  about  it,  and  part  of 
the  time  which  he  was  being  paid  to 
devote  to  the  business  in  which  he  was 
engaged  would  be  expended  in  worrying 
about  his  investment  in  the  business  in 
which  he  was  not  engaged;  whereas,  if 
his  money  were  invested  in  the  business 
in  which  he  was  engaged,  his  desire  to 
see  his  investment  succeed  and  bring 
him  further  profits  would  be  converted 
into  efforts  that  would  be  of  some 
practical  benefit,  not  only  to  himself, 
but  to  the  stockholders  and  his  co- 
workers. 

1181 


m 


\ 


WORKER'S      FAIR       SHARE 

In  short,  little  real  substantial  benefit 
comes  from  a  profit-sharing  plan  where 
the  profits  are  paid  out  in  cash,  except 
perhaps  where  a  man  uses  the  money 
toward  buying  a  home. 

There  is,  therefore,  a  serious  weakness 
somewhere  in  such  a  plan,  and  the  weak- 
ness lies  in  the  fact  that  profit  sharing 
cannot  be  really  beneficial,  either  for 
employer  or  employe,  unless  conducted 
on  a  partnership  basis  and  coupled  with 
profit  saving. 

Looking  at  it  from  the  viewpoint  of 
capital,  the  object  to  be  accomplished 
through  the  adoption  of  profit  sharing  is 
added  interest  in  the  business  on  the 
part  of  employes,  which  in  turn  brings 
higher  eflBciency. 

Looking  at  it  from  the  standpoint  of 
the  employe,  the  object  to  be  accom- 
plished is  a  fairer  remuneration  for 
services  rendered. 

Therefore,    any    profit-sharing    plan 

[191 


PROFIT      SHARING      OR      THE 

that  fails  to  accomplish  both  of  these 
results  breaks  down  sooner  or  later. 


Full  Publicity  Needed  About  the 

Business 

In  establishing  profit  sharing  it  is  of 
the  utmost  importance  that  the  entire 
organization,  the  wage  and  salary 
earners,  know  in  advance  exactly  what 
they  are  expected  to  accomplish. 

I  mean  by  this  that,  on  entering  a  new 
year,  they  should  know  exactly  what  the 
preceding  year's  accomplishments  have 
been.  The  annual  statement  of  the  con- 
cern should  be  full  and  explicit,  so  that 
every  man  engaged  in  the  enterprise  will 
know  what  business  was  done  in  the 
preceding  year  and  on  what  basis  profits 
were  and  are  to  be  distributed. 

An  honest,  detailed  annual  statement 
tells  him  officially  what  the  profits  were, 
if  any,  and  this  fixes  a  minimum  goal  for 

[20] 


i 


I 
1 


WORKER'S       FAIR       SHARE 

the  coming  year,  which  everyone,  in- 
dividually and  collectively,  will  bend 
every  energy  to  reach  and  exceed  by  as 
large  an  amoimt  as  possible. 

Under  such  an  arrangement  as  this, 
each  man,  in  place  of  working  solely  for 
himself  in  his  own  department,  will  pass 
on  to  other  departments  any  ideas  that 
occur  to  him  that  might  help  that  other 
department,  and  in  that  way  benefit  the 
organization  as  a  whole. 

In  my  judgment,  some  profit-sharing 
plans  are  radically  wrong  in  this  respect. 
They  distribute  profits  by  departments 
or  in  some  way  other  than  on  the  basis 
of  the  company's  success  as  a  whole. 

This  narrows  the  vision  of  the  in- 
dividual, and  he  lacks  the  proper  incen- 
tive to  help  wherever  he  can,  whether 
in  his  own  or  another  department. 

The  right  kind  of  profit  sharing  offers 
definite  goals  that  an  organization^  itir 
dividually  and  as  a  whole,   can  buckle 

[21J 


t 


PROFIT      SHARING      OR      THE 

down  and  work  for,  and  it  is  astonishing 
how  such  a  plan  of  profit  sharing  will 
heighten  the  esprit  de  corps. 

It  removes  petty  jealousies;  it  makes 
a  man  eager  to  pass  his  ideas  on  to  the 
man  in  the  next  department,  and  causes 
them  to  vie  with  one  another  to  reach 
and  exceed  the  figures  reached  in  the 
preceding  year. 

A  detailed  annual  report  by  the  com- 
pany is  not  only  necessary  to  show  the 
organization  in  prosperous  years  how  the 
profits  were  arrived  at  and  what  they 
amounted  to,  but  equally  necessary  in 
lean  years  to  show  how  the  losses  were 
arrived  at,  what  they  amounted  to  and 
why  there  are  no  profits  to  distribute. 
Gradually,  as  the  employes  in  the 
organization  become  part  owners  in  the 
business,  you  broaden  and  deepen  their 
interest  in  their  work. 

They  begin  to  think  and  speak  of  the 
business  as  their  business;  they  work  for 

[22] 


WORKER'S       FAIR       SHARE 

it  as  their  business,  not  your  business  or 
somebody  else's,  and  in  place  of  ^  ^knock- 
ing'' it  they  praise  it  and  ^' boost"  it  in 
every  way  they  can,  for  they  have  be- 
come part  owners  through  being  security 
holders  and  are  receiving  their  interest 
or  dividends  at  the  same  time  and  in  the 
same  manner  as  other  security  holders 
receive  theirs. 

In  other  words,  once  the  employes 
become  security  holders,  they  share  in 
interest  or  dividend  distributions  and 
other  profits,  not  only  as  security  holders 
but  as  employes. 


Some  Objections  to  the  Plan 

Answered 

Many  people  have  said  to  me:  ^^Oh, 
but  it  takes  a  long  while  for  a  man  who 
is  only  saving  a  small  sum  each  year  to 
acquire  much  of  a  financial  interest  in 
the  concern  by  which  he  is  employed." 

[23] 


PROFIT      SHARING      OR      THE 

I  have  always  found  that  such  criti- 
cism comes  from  someone  who  has  not 
given  sufficient  thought  to  the  subject, 
for  a  small  interest  means  as  much  to 
the  man  having  a  comparatively  small 
salary  as  a  large  interest  does  to  the  man 
of  large  affairs. 

Let  us  summarize  some  of  the  ad- 
vantages of  this  method  of  profit  sharing : 

First.  It  is  real,  it  is  genuine.     The 

organization  as  a  whole,  and  each 
individual  in  it,  has  a  definite 
goal  for  the  year's  work. 

They  know  at  the  beginning  of 
the  year  how  much  money  must 
be  earned  to  cover  what  we  will 
call  fixed  charges. 

They  know  that  they  are  being 
paid  salaries  to  earn  those  fixed 
charges. 

They  know  that  they  share  in 
all  profits  over  and  above  those 
fixed  charges,  and 

They  know  the  basis  on  which 

they  share,  and  that  the  amount 

of  such  profits  largely  depends  on 

the     individual     and     collective 

(241 


WORKER'S       FAIR        SHARE 

effort  of  each  individual  in  the 
organization. 

This  in  itself  is  of  great 
practical  value  to  the  business 
from  a  dollar-and-cent  stand- 
point. There  is  no  philanthropy 
about  it. 

The  employes  have  a  certain 
definite  goal  to  reach.  If  they 
reach  it  they  are  paid  a  definite 
percentage  for  doing  so. 

It  is  a  definite  business  propos- 
ition, based  on  the  principle  of 
profit  sharing  as  practiced  in 
partnerships. 


Second. 


Having  reached  the  goal  set, 
the  money  over  and  above  the 
salaries  they  are  paid — in  other 
words,  their  profits — are  invested 
in  the  business  in  which  they  are 
engaged  and  on  which  their  whole 
time  and  thought  and  energy 
should  be  centered. 

What  a  great  advantage  this  is 
to  the  employer,  and  what  a  spur 
and  incentive  to  the  employe! 

What  more  valuable  insurance 
policy  could  an  employer  have 
against  a  year  of  poor  earnings? 

What  a  real,  genuine  interest  it 

[25] 


PROFIT      SHARING      OR      THE 

arouses  in  the  worker  for  the 
business  in  which  he  is  engaged! 

The  whole  atmosphere,  the 
whole    relationship    is    changed. 

The  employer  need  give  little 
thought  to  whether  or  not  his 
men  are  ''soldiering"  on  him, 
whether  or  not  they  are  really 
giving  to  their  work  the  best  that 
is  in  them ;  and  the  employe  need 
spend  little  time  wondering 
whether  or  not  he  is  being 
properly  compensated. 

The  whole  relationship  is 
placed  on  a  new  basis,  not 
antagonistic,  as  heretofore,  but 
cooperative. 

This  plan  is  vastly  different  from  the 
one  now  practiced  by  which  one  set  of 
men  working  in  a  business,  viz.,  the 
capitalists  and  partners,  leave  most  of 
their  profits  in  the  business,  while 
another  set  of  men,  working  shoulder  to 
shoulder  with  them,  viz.,  the  employes, 
each  year  take  their  profits  out  of  the 
business  and  put  them  somewhere  else. 

[26] 


WORKER'S       FAIR       SHARE 


/ 


The 


of  a  Profit  Sharing 
that  Does  Harm 


It  is  also  vastly  different  from  the 
many  bonus  schemes  in  vogue. 

It  differs  greatly  from  the  plan  of 
arbitrarily  setting  aside,  in  a  prosperous 
year,  a  certain  lump  sum  of  money  and 
dividing  it  on  a  percentage  basis  among 

the  employes. 

Under  such  an  arrangement  no  man 
who  gets  any  of  the  money  has  any  very 
definite  idea  of  what  he  did  to  earn  it, 
what  it  represents,  or  what  he  in- 
dividually can  do  to  ensure  the  receipt  of 
some  such  sum  during  the  following  year. 

In  fact,  I  am  convinced  that  such 
bonus  giving,  erroneously  called  profit 
sharing,  has  done  more  harm  than  good, 
for  in  many  instances  it  has  caused  em- 
ployes  to  feel  that  said  bonuses  were 
given  them  because  the  business  was 

[27] 


PROFIT       SHARING      OR       THE 


WORKER'S       FAIR       SHARE 


earning  fabulous  sums  of  money,  a  tin)- 
little  bit  of  which  was  thrown  to  them  as  a 
sop  to  make  them  feel  kindly  disposed  to- 
wards the  ownerS;  or  in  order  to  ward  off 
a  demand  for  a  general  increase  in  wages. 

In  short,  such  bonus  giving  simply 
stirs  up  trouble  rather  than  alleviates  it. 

Profit  sharing  on  the  basis  I  favor  is 
sometimes  objected  to  by  men  or  con- 
cerns who  do  not  wish  to  let  even  their 
own  employes  know  how  little  or  how 
much  money  they  are  making  each  year. 

To  such  men  I  always  say  (and  each 
year  I  am  more  and  more  certain  that  I 
am  right  in  saying  it)  that  they  are  very 
short-sighted  if  they  do  not  hasten  to 
change  their  policy. 

If  they  are  not  making  enough  money 
and  the  business  is  running  on  a  close 
margin  each  year,  then  by  all  means  they 
should  set  their  situation  before  their 
men,  adopt  such  a  profit-sharing  plan  as 
I  have  outlined,  and  get  the  genuine 

(281 


s 


cooperation  of  every  man  towards  in- 
creasing the  profits  and  putting  the  busi- 
ness in  a  prosperous  condition. 

They  are  now  pajdng  wages  and  sal- 
aries, and  many  a  night  go  home  wonder- 
ing whether  the  employes  are  really 
earning  their  salaries. 

Under  such  a  profit-sharing  plan  as  I 
have  outlined  they  have  a  substantial 
guarantee  that  the  salaries  will  be  earned 
because  in  aiming  to  share  in  profits  over 
and  above  fixed  charges  the  men  are  all 
the  more  certain  to  earn  at  least  the 
fixed  charges. 

And  would  any  proprietor  or  manager 
hesitate  to  pay  a  handsome  premiimi 
each  year  for  an  insurance  policy 
guaranteeing  that  every  employe  in  the 
business  would  have  the  business  on  his 
mind  and  work  as  hard  for  its  success  as 
the  proprietor  or  manager  does? 

One  more  thought  in  this  connection. 

[29] 


PROFIT      SHARING      OR      THE 


WORKER'S       FAIR       SHARE 


The  man  who  is  running  on  a  small 
margin  and  making  little  profit  may 
object  to  making  his  business  affairs 
public  property,  on  the  groimd  that  he 
would  be  putting  a  weapon  into  the 
hands  of  his  competitors. 

Such  a  man^s  best  protection  against 
his  competitors  is  a  loyal,  closely  knit 
organization  of  the  highest  efficiency, 
and  this  important  advantage  he  can 
only  secure  through  a  bona  fide  profit- 
sharing  plan. 

As  for  the  man  who  is  making  so  much 
money  that  he  is  afraid  to  let  even  his 
own  employes  know  how  much  he  is 
making,  to  that  man  I  say  that  he  is  the 
man  who,  more  than  any  other,  is 
responsible  for  the  serious  differences 
to-day  existing  between  capital  and 
labor,  for  with  the  growing  intelHgence  of 
the  masses,  how  can  he  expect  such  a 
situation  to  continue? 

Every  year,  yes,  every  day,  it  becomes 

[30] 


\ 


clearer  and  clearer  that  such  a  condition 
will  no  longer  be  tolerated  and  must 
speedily  pass  away. 

Would  it  not  be  better  for  him  to  use 
some  intelligent  foresight  and  meet  what 
clearly  are  to  be  the  immediate  future 
demands  of  public  opinion? 

As  for  the  man  who  is  making  large 
profits  but  who  objects  to  profit  sharing 
on  the  ground  that  he  wants  to  put  those 
profits  away  against  the  day  when  busi- 
ness may  be  poor. 

To  such  a  man,  I  say  that  he  had 
better  use  some  of  those  profits  to  more 
deeply  interest  his  men  in  his  business, 
and  do  this  to  such  an  extent  that  if  the 
dark  days  come  he  can  be  pretty  certain 
that  his  men  will  stand  by  the  business 
in  a  way  that  capital  alone  never  can. 

Profit  sharing  on  the  basis  I  favor  is 
also  sometimes  objected  to  by  concerns 
whose  securities  are  closely  held.  There 
are  many  ways  to  obviate  this  difficulty. 

[31] 


PROFIT      SHARING      OR      THE 


WORKER'S       FAIR        SHARE 


Some  concerns  can  increase  their 
capital. 

Others  that  cannot,  or  that  cannot  do 
so  for  a  time,  can  obviate  the  difficulty 
by  issuing  certificates  of  participation 
that  will  draw  the  same  percentage  of 
profit  as  the  regular  securities  of  the 
business. 

In  other  words,  where  there  is  a 
genuine  desire  to  share  profits  a  way  can 
always  be  found. 

The  day  of  secretive  methods  is  pass- 
ing rapidly.  The  day  of  pubhcity  is  at 
hand.  The  change  is  a  perfectly  natural 
evolution  due  to  broader  education  and 
improved  intercommunication  and  has 
also  come  about  because  it  is  second 
nature  to  be  less  suspicious  and  afraid  of 
that  which  is  known  than  of  that  which 
is  unknown. 

Any  profit-sharing  plan  without  an 
open,  honest  balance  sheet  and  detailed 
annual  report  will  never  succeed. 

132] 


s 


/ 


I  am  convinced  that  labor  is  entirely 
wilUng  that  capital  should  have  its  fair 
reward  and  proper  protection,  but  in  this 
country  we  have  had  too  many  instances 
where  capital  had  demanded  improper 
protection  and  taken  exorbitant  reward ; 
and  one  of  the  main  reasons  why  the 
serious  problems  confronting  us  to-day 
are  so  difficult  of  solution  lies  in  the  fact 
that  too  many  men  of  capital  are  still 
arrogant  and  unreasonable,  and  abso- 
lutely unwilling  to  look  with  sufficient 
care  and  fairness  into  the  causes  that 
are  producing  the  views  and  opinions  so 
largely  held  by  our  people  at  this  time. 

On  the  other  hand,  one  of  the  most 
serious  drawbacks  to  increased  output 
and  economical  production  is  the  Hstless, 
indififerent  service  rendered  by  a  large 
percentage  of  employes. 

Making  partners  of  employes,  through 
profit  sharing,  would  correct  this  as 
nothing  else  could. 

(33) 


PROFIT      SHARING      OR      THE 


Profit  Sharing  that  Has  Been 

a  Success 

Some  companies  with  which  I  am 
connected  have  reahzed  the  trend  of  the 
times  and  have  for  some  time  been 
practicing  profit  sharing  along  the  Knes 
I  have  indicated. 

They  believed  that  profit-sharing 
plans  based  on  such  principles  would  so 
knit  their  vast  organizations  together, 
and  would  so  strengthen  and  develop 
the  esprit  de  corps,  as  to  make  it 
possible  for  the  companies  to  increase 
their  business  and  their  earnings;  and 
they  were  wilHng  to  share  this  mcreased 
success  with  their  employes. 

So  far  they  have  every  reason  to  con- 
gratulate themselves  on  the  results. 

In  all  parts  of  their  business,  at  home 
and  abroad,  in  the  oflSce  force,  in  the 
factories,  in  the  sales  department,  every- 

[34] 


WORKER'S       FAIR       SHARE 


^ 


where,  the  individual  employe's  interest 
in  the  business  is  much  greater  than 
formerly. 

The  saving  in  waste  everywhere  is 
noticeable. 

The  employes  are  vieing  with  one  an- 
other more  and  more  to  improve  their 
respective  and  other  branches  of  the 

business. 

All  this  means  success  for  the  com- 
pany, profits  for  the  stockholders,  extra 
compensation  for  the  employes. 

It  means  getting  men  on  salaries  and 
wages  to  have  a  live,  keen  interest  in  the 
management  of  the  business. 

It  means  getting  an  organization  of 
men  to  work  as  real  partners. 

It  means  recognizing  the  right  of  the 
employe  to  a  fairer  share  of  the  earnings 
of  the  business  in  which  he  is  engaged. 

In  short,  it  means  cooperation  that  is 
complete,  in  that  it  benefits  stockholder, 
employer  and  employe. 

[36] 


PROFIT      SHARING      OR      THE 


WORKER'S       FAIR        SHARE 


{ 


WTiile  all  this  can  more  readily  be 
accomplished  in  a  large  business,  it  can 
also  be  successfully  accomplished  in  a 
small  business  if  approached  in  the 
proper  spirit ;  and  if  appUed  generalty  it 
would  remove  to  a  considerable  degree 
the  dangers  that  are  menacing  modern 
industry,  and  which  are  largely  caused 
by  the  feeling  on  the  part  of  the  masses 
that,  through  wages,  they  are  not 
getting  their  proper  proportion  of  the 
money  earned  in  a  given  industry. 

An  industrial  democracy  of  the  most 
ideal  sort  is  found  in  true  profit  sharing ; 
an  industrial  democracy  that  makes  real 
partners  of  capital  and  labor,  and  yet 
preserves  the  right  of  private  property; 
that  preserves  and  promotes  the  great 
business  asset  that  comes  from  indi- 
vidual initiative;  that  retains  the  cap- 
itaUst^s  incentive  to  enterprise,  while 
giving  the  worker  a  new  inspiration  for 
effort  that  humanizes  large  organiza- 

[36] 


/^ 


4' 


tions  of  men;  that  promotes  good  will 
and  industrial  peace. 

All  these  things  this  country  of  ours 
needs  now  as  never  before. 

The  shelves  of  the  world  are  bare. 
The  entire  world  needs  supplies — sup- 
plies of  food,  clothing,  building  material, 
eveiything. 

As  long  as  the  supply  of  these  things 
is  so  low  and  the  demand  for  them  all 
over  the  world  is  so  great,  the  cost  to  the 
consumer  will  remain  high. 

Therefore,  one  of  the  surest  paths 
leading  to  a  reduction  in  cost  to  the 
consumer  is  to  raise  and  manufacture  a 
large  supply  of  these  necessities  as 
quickly  as  possible. 

Linked  with  the  desire  to  supply  our- 
selves with  food,  clothing  and  other 
necessaries  at  low  cost  is  our  desire  to 
furnish  the  world  with  these  and  other 
articles,  in  order  to  extend  our  trade  and 

[37] 


•^ 


J 


PROFIT      SHARING      OR      THE 


foster  the  prosperity  of  our  people  as  a 
whole. 

But  as  practically  every  other  nation 
hopes  to  secure  a  large  part  of  this  trade 
for  herself,  is  it  not  a  certainty  that 
competition  among  the  nations  will  be 
keener  and  sharper  in  the  immediate 
future  than  it  has  ever  been  in  the  his- 
tory of  the  world? 

How  can  we  possibly  meet  this  in- 
creased competition  if  we  are  divided 
among  ourselves? 

Could  there  be  two  more  potential 
reasons  why  we  Americans  should  have 
the  closest  possible  cooperation  between 
capital  and  labor? 

Could  anything  bring  higher  efficiency, 
greater  production? 

The  only  way  to  secure  this  coopera- 
tion in  the  highest  degree  is  by  eliminat- 
ing the  distrust  that  has  existed  between 
capital  and  labor  for  so  many  years, 
and  establishing  confidence  in  its  place. 

[38] 


WORKER'S       FAIR       SHARE 


^ 


Nothing  will  do  this  except  frank, 
open  dealing,  publicity  as  to  earnings 
and  a  fair  division  of  earnings. 

Since  the  beginning  of  time,  no 
country  has  ever  had  such  an  oppor- 
tunity to  extend  its  trade,  increase  its 
prosperity  and  better  the  material  con- 
dition of  every  one  of  its  people  as  has 
the  United  States  of  America  at  this  very 
hour. 

The  only  factor  missing  is  that  of  close 
cooperation  here  at  home  among  our- 
selves. 

It  seems  inconceivable  that  we  will 
fail  to  realize  where  our  weakness  lies 
and  fail  to  adopt  the  one  and  only 
remedy  for  it. 

In  the  strenuous  competition  with  the 
rest  of  the  world  that  this  country  is  on 
the  eve  of  facing,  could  we  have  a 
stronger  weapon  than  complete  co- 
operation between  capital  and  labor  at 
home? 

[39] 


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